Don, thanks for the bait. I'll nibble at it a bit again.
I agree with economists who believe that incentives are the best way to
resolve problems, at least insofar as that belief goes. I disagree with
economists who believe that incentives "distort" markets as if modern
markets could possibly exist independent of rules put in place by
government,
In short, I think a nice simple per-molecule carbon emission tax and carbon
sequestration subsidy is a very promsing approach.
I think that abandoning the genius of capitalism is every bit as foolish as
ignoring its shortsightedness. We are in a pretty pickle and we need to use
every tool at our disposal to get out of it. Giving people incentives to
solve problems is better than not giving them incentives.
My skepticism about economics runs deep. For now let me point to this
announcement of a talk I received recently:
===>
Prof. Michael Berry, Physics Department, Bristol University
/Emergence and Asymptotics in Physics: How One Theory Can Live inside
Another/
In physics, each deeper level of description (e.g., quantum mechanics)
"reduces" to a less general level (e.g., Newtonian mechanics) in the
asymptotic limit when a characteristic parameter (e.g., Planck's
constant) is negligibly small. Such limits are usually singular; hence,
the different levels can involve very different concepts
("incommensurability") and lead to predictions of qualitatively new
phenomena inhabiting the borderlands between theories.
...
<===
I think the claims made by Prof. Barry will appear meaningless to
economists, whereas most physical scientists will follow along with him.
The point is that economists do not typically recognize regimes of
applicability of any of their theories which leads them to an absurd
tendency to absolutism.
(In fact their theories are quite fuzzy because their object of study
ultimately is human behavior, which has vast and mysterious confounds, but
let's leave that aside for the moment.)
My belief is that economics is useful as an instrument of policy only on
time scales shorter than a decade. On long time scales ignoring the terms
that are easily neglected on short time scales leads to absurd conclusions.
The absurd advice nevertheless seems to have a lot of influence, if only
because the people who are most familiar with the tools of economics
naturally have amassed a lot of power.
Once you are beyond the ten-year horizon and approaching the hundred-year
time scale these ideas that seem so clever in the short run seem to turn
into blithering idiocy in the long run. The basic ideas, that wealth can be
increased without limit forever, should be increased without limit forever,
and can be defined in terms of what people trade with each other, seem to be
generally accepted.
I find this point of view just about meaningless. It's absurd to me. I
don't just disagree with it. I can't fathom what it means. Suppose "wealth"
continues to grow at 2% per year for 100,000 years. What does that mean?
Will everyone have a thousand servants? Will everyone have an estate the
size of Connecticut? Will everyone be invited to all the best parties? I am
just puzzled as to what is being said here.
I realize I'm somewhat eccentric on this point but I'm trying not to be
stubborn about it. I would be very pleased if someone could explain to me
why they are so sure that their analysis is useful on long time scales.
Every attempt I've seen so far seems to me like highly circular
question-begging.
It's tedious to be mistaken for a Marxist when I say this. It is not
capitalism I am questioning. I think corporations play a crucial role in our
world and should do so. I think creative people who want to get rich should
be able to do so by providing excellent products and services.
I think corporations and entrepreneurs need to be given appropriate
incentives to achieve social goals, though. In my opinion the corporations
are and should be amoral. Thet need to be guided and constrained by
government, and in the case of CO2 they are even beginning to understand
this.
I think perpetual "growth" in the economy should not even be among the goals
of governance, never mind the primary one.
It would be funny if there weren't so much at stake. Unfortunately it's not
a very funny joke. The consequence of taking this idea of perpetual "growth"
seriously seems to be increasing stress, insecurity, injustice, strife,
waste, cultural decline and irreversible environmental damage. In a world
of plenty which could manage so much better if the core assumptions shifted
a bit, I hope you will forgive me if I'm not impressed by all the "growth".
mt
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